Fed Debt-Limit Contingency Plans Detailed in 2011 Transcripts
- Blueprint prioritized making interest and principal payments
- Details of contingency plans had been political flash point
The Marriner S. Eccles Federal Reserve Board Building stands in Washington, D.C., U.S., on Tuesday, Nov. 30, 2010.
Photographer: Joshua Roberts/BloombergThis article is for subscribers only.
Federal Reserve officials assumed that the the U.S. Treasury would prioritize payments on government securities over other obligations in case the legal debt limit were breached, according to a transcript of a 2011 meeting of central bank policy makers.
U.S. central bankers were briefed in an Aug. 1, 2011, conference call on how the Treasury would handle principal and interest payments on government securities. The full details of that meeting were secret until Thursday, when the Fed released transcripts of the Federal Open Market Committee’s 2011 meetings under the customary five-year lag.